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The Key to Success,E.Procurement is not about technology alone. Savings are never automatic. Centralized procurement will need to negotiate the required agreements,Streamlining processes Enabling processes with technology Simplify payment process Optimizing the supplier base,Supplier Readiness,E.Procurement requires Supplier capabilities At a minimum: 1. Electronic catalog content files 2. Internet access Desired: 3. Inventory availability 4. Order Status 5. Shipping details 6. Order entry integration via XML,Two Categories of Procurement,Procurement of Indirect and Direct goods and services are usually the responsibility of two separate organizations and have different business objectives and strategies such as long term contracts versus spot buys.,Indirect Office Equipment and supplies, Computer & IT equipment, MRO, Services, Expensed goods and services not consumed in the manufacturing of a product Direct Raw materials and packaging materials used in the manufacture and assembly of products.,Benefits,Leverages corporate spending power for lower prices Enables increased use of price agreements and approved suppliers,Reduces total lead time by 5080%,Improves buyers role as negotiator Reduces transaction processing time and manpower,Acquisition,Inventory Carrying,Transaction,Cost reduction in three major areas,Benefits,Examples of electronic procurement results,Transaction Costs,Additional Discounts,Cycle Time,Compliance Agreements,Costs per Transaction,-90%,-10%,-75%,+30%,Price,Time,Compliance,100%,100%,20 Days,60%,90%,10%,5 Days,90%,Benefits,Intangibles,Benefit Source,Purchased Unit Cost Reduction,Process Efficiency,Benefits = software solution + process change,As a percentage of total purchase cost plus process cost for a catalogued item,25%*,1015%*,Purchasing Efficiency Supplier Integration,SAP, Global Chemical & Pharmaceutical Marketplace,Business Challenge: Chemical industrys online sales increasing to 40% by 2005) Disintermediation of chemical producers Lower overall supply chain costs Increase overall service efficiency Deeper penetration of strategic accounts Capture wealth in the new economy EDS Role: Technology and Integration support A.T. Kearney Leveraged Sourcing Networks corporate buyers and strategic suppliers,Initial Members: BASF AG Bayer AG Degussa-Huls AG Henkel KgaA KSB AG Linde AG Sartorius AG Siemens AG Heinz Wollschlager GmbH,Case Study TruckBay,Business Challenge: Create B2B Marketplace for the trucking and trucking maintenance industry. Corporate startup: No business processes, no infrastructure architecture, and no existing systems are in place for this EDS Solution: Deployed the initial marketplace within 90 days Adopted 30 suppliers Normalized 60,000 catalog items Implemented Marketplace in five months Will add further customizations and reverse auctions,Client Value: Lower buying/selling transaction costs Provide alternate parts catalogs Reduce buyers inventory carrying costs Increase productivity of procurement processes Cut layers from existing distribution channels Consolidation of procurement activities,Trading Exchanges: The Executive Dilemmas,Do We Join an Existing Exchange? If So, How Do We Prevent Our Products From Becoming Commodities? Do We Form An Exchange With One or More of Our Competitors? How? Weve Hated Them for Decades? Do We Start Our Own? Will Anyone Join?,The Engines that will Power Covisint,Integration Engine Communication Engine Collaboration Engine Procurement Engine,Covisint is still a novelty, but it will become a critical component in every suppliers e-business strategy,Problem Summary,Lack of connectivity to all suppliers / all customers Push vs. Pull Batch vs. Real time Cost of communication / EDI Maps Requires Personnel Intervention Builds Inventory,Problem Summary,Real-time Visibility of Inventory, Consumption, Shipments, and Forecasts,Tier-2 manages material flow to Tier-1, and to Tier-1s inventory,Benefits: Eliminate excess inventory Reduced expediting Better planning/execution Economically communicate demand forecast/delivery notifications to suppliers,Internet / ANX,Todays Solutions :,Provide real time data flow Web Browser Visible System to System XML Compatible with EDI Multiple fulfillment processes Able to connect with emerging exchanges Delivering big results quickly WIN WIN for both sides of the supply chain,Todays Solutions :,Collaborative Manufacturing Workshop,How close are we to a 5-day car? 63 days away!,Source: AMR Research,Order to Component = 35 days,Component to Consumer = 33 days,Todays Order to Delivery = 68 days (and thats without ordering steel),Todays Delivery Date Accuracy 20%,Accelerated OTD is Enabled by Information Visibility,Source: AMR Research,Impact of re-engineered OTD on Suppliers,Typical impact on commodity suppliers faster/cheaper In-sequence production will become mandatory for critical system suppliers Less pressure on component inventory Little impact on material suppliers Co-location will become deciding factor for choosing key system suppliers,e-Manufacturing Solutions,Enables manufacturers to deliver on promises Addresses order fulfillment issues created by the e-business model to conduct business through effective integration Ensures manufacturing people, processes, and technology are aligned with e-business goals,e.Manufacturing Defined Enabling Manufacturing Operations for e-business,Result: Demand fulfillment synchronized with demand generation,Maintenance/Repairs,Scrap/ Rework,Production Lines,Shipping/Receiving,Bar Code Printing,e-Manufacturing Solutions,Order Fulfillment - Functional Areas,Product marketing, development and configuration Supply chain network planning Demand forecasting and planning Supply planning and sourcing Manufacturing scheduling Warehousing and inventory planning Transportation and distribution planning Manufacturing Execution Maintenance, repair and operations planning and execution Performance measurement and monitoring,Plan,Execute,Maintain,Collaboration,S t akeho l de r s,Customers, Resellers,Suppliers, Distributors, Partners,Customer Relationship Management,Marketing,Sales,Customer Service,Selling Chain Management,Supply Chain Management,Enterprise Resource Planning,Logistics,Production,Distribution,Knowledge-Tone Applications,Enterprise Application Integration,Administrative Control HRMS / BMS / ORMS,Finance/Accounting/Auditing Management Control,Emp l oye e s,Business problems that lead a customer to EAI Service: How do I . conduct electronic business (cross selling) whose overall enterprise business process spans multiple disparate application systems and manual processes ? conduct electronic commerce that spans multiple enterprises ? enable a business process to span the boundaries of independently designed and managed systems (applications, data warehouses, third party systems, packaged applications) ? facilitate efficient, cross-functional information flow across disparate data warehouses, ERP system, and legacy environments ?,Business Challenges,Business problems that lead a customer to EAI Service: How do I (continued) . integrate information systems from different infrastructures and geographies ? .provide users with more power to gather and analyze data for improved decision making ? .leverage legacy investments to satisfy information requirements at the desktop ? .meet immediate business requirements while developing an improved enterprise environment?,Business Challenges,The Integration Challenge,The Traditional Approach . integrates applications only one at a time, creating an ultimate morass of individual links that cannot be reused to develop subsequent applications,The New Integrated Approach . Uses a middleware layer of standard interfaces to mediate interactions among legacy applications, packaged applications, data warehouses, business methods, and new Web functionality.,Enterprise Application Integration,Enterprise Portal,Integrated Enterprise,Division A System,SAP Financial,HRMS,Division C System,Division B System,SCM/ CRM Application,Process Control Systems,Business Partners System,EAI/Middleware,Enterprise Data Warehouse,Application Integration Frameworks Message Oriented Middleware Distributed Object Computing Decision Support Integration Web / Java Integration Transaction Processing Monitors Remote Database Access Systems Management and Security Interprocess Communication,EAI Technologies,Application Integration Frameworks Message Oriented Middleware Distributed Object Computing Decision Support Integration Web / Java Integration Transaction Processing Monitors Remote Database Access Systems Management and Security Interprocess Communication,EAI Technologies,New Ways of Working,Value,Time,Process automation No reengineering Accurate information,Functional automation Reengineering of a process in a functional area Enhanced information access,Improve processes across departments Organizational reengineering Shared information networks,Inter-enterprise process improvement Inter-organization reengineering Integrated information networks,Cost,Cost,Productivity,Cost,Productivity,Revenue,Revenue,Opportunity,Market Share,Departmental efficiency,Multi-departmental efficiency,Multi-departmental integrated efficiency,Inter-enterprise integration,Task Automation (Departmental Comp.),Infor

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